What is AMN's Intrinsic value?

AMN Healthcare Services Inc (AMN) Intrinsic Value Analysis

Executive Summary

As of June 12, 2025, AMN Healthcare Services Inc's estimated intrinsic value ranges from $5.19 to $143.75 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $5.19 -76.5%
Earnings Power Value $143.75 +551.9%

Is AMN Healthcare Services Inc (AMN) undervalued or overvalued?

With the current market price at $22.05, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate AMN Healthcare Services Inc's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.87 1.38
Cost of equity 7.9% 12.6%
Cost of debt 4.8% 9.1%
Tax rate 24.7% 26.0%
Debt/Equity ratio 1.31 1.31
After-tax WACC 5.5% 9.3%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 7.4% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $2,984 (FY12-2024) to $3,389 (FY12-2034)
  • Net profit margin expansion from -5% to 1%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $(1,234) $836M 83.0%
10-Year Growth $5 $1,139M 66.6%
5-Year EBITDA $14 $1,470M 90.3%
10-Year EBITDA $20 $1,697M 77.6%

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $443M
Discount Rate (WACC) 9.3% - 5.5%
Enterprise Value $4,778M - $8,108M
Net Debt $940M
Equity Value $3,838M - $7,167M
Outstanding Shares 38M
Fair Value $100 - $187
Selected Fair Value $143.75

Key Financial Metrics

Metric Value
Market Capitalization $844M
Enterprise Value $1784M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 15.55
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.31

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 75% $1.56
Earnings Power Value 25% $14.37
Weighted Average 100% $39.83

Investment Conclusion

Based on our comprehensive valuation analysis, AMN Healthcare Services Inc's weighted average intrinsic value is $39.83, which is approximately 80.6% above the current market price of $22.05.

Key investment considerations:

  • Strong projected earnings growth (-5% to 1% margin)
  • Consistent cash flow generation

Given these factors, we believe AMN Healthcare Services Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.